Committee on Education and the Workforce
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ULLICO Witnesses Evade Questions on Sweetheart Stock Deals
Committee is Examining Whether Questionable Stock Transactions Violate Federal Labor and Pension Laws
WASHINGTON, D.C. - House Education & the Workforce Committee Republicans expressed concern today about the questionable stock transactions at the scandal-plagued union-owned life insurance company ULLICO Inc., and their impact on rank-and-file union members. At a hearing this morning, key witnesses connected to ULLICO failed to ease congressional concerns that the sweetheart stock deals at the union-operated company did not violate federal labor and pension laws.
During the hearing, former ULLICO Chairman and CEO Robert Georgine refused to testify, instead invoking his Fifth Amendment right against self incrimination. In addition, Damon Silvers, counsel to the new chairman of ULLICO, suggested that no pension monies had been lost -- a proposition that lacks credibility in light of the fact that these stock transactions enriched ULLICO's leadership at the expense of the pension funds and unions that were ULLICO’s shareholders.
“Last year, we subpoenaed Enron executives to testify about the Enron collapse and its implications for the retirement security of American workers, and they cooperated with the Committee and answered our questions,” said Rep. John Boehner (R-OH), chairman of the Education & the Workforce Committee. “Our committee today intended to examine the ULLICO scandal, but unfortunately Mr. Georgine chose not to respond, and Mr. Silvers did little to address the Committee’s concerns.”
“There are many questions that remain unanswered about the ULLICO scandal, and rank-and-file union members deserve answers,” Boehner added. “At the very same time that union leaders were joining the chorus of well-deserved criticism of Enron and others for corporate misconduct, ULLICO set up a system of insider stock deals that made millions for the board at the expense of rank-and-file union members.”
“I am deeply troubled that the Committee did not hear testimony from perhaps the only person who could answer some of the tough questions, ULLICO’s former chairman, Mr. Georgine,” said Rep. Sam Johnson (R-TX), chairman of the Employer-Employee Relations Subcommittee. “I would have liked to ask Mr. Georgine, how is it possible that if Board members profited at the expense of these pension funds – and the record is clear that they did – did they not violate their fiduciary duties to those pension funds under ERISA?”
“The millions of union members whose pensions suffered while Mr. Georgine and his cronies benefited deserve more than this: they deserve answers,” said Rep. Charlie Norwood (R-GA), chairman of the Workforce Protections Subcommittee. “From where I’m sitting, I see a lot of rank and file union members - whose interests unions are supposedly out to protect - losing money that went into the pockets of their so-called ‘representative’ leadership.”
There are serious questions about whether the questionable transactions at ULLICO violated federal labor law (Labor-Management Reporting and Disclosure Act; LMRDA) and federal pension law (Employee Retirement Income Security Act; ERISA) -- questions that were not addressed by former Illinois Gov. James Thompson, who investigated the ULLICO transactions and authored an independent report on the questionable deals, because ULLICO told him not to look into those areas.
“The federal government has laws on the books that are designed to give working Americans confidence that the people responsible for maintaining their pension funds and their union dues are doing so,” said Boehner. “It remains an open question whether these laws have been violated by the questionable transactions that took place at ULLICO.”
“American workers deserve to know:
were federal labor laws violated at ULLICO?
Were federal pension laws violated at ULLICO?”